More sanctions on Russia seen as toothless, self-defeating

More aggressive economic sanctions against Russia for meddling in eastern Ukraine would be toothless and actually hurt Europe more than anyone else, a leading economist said.

Russia’s principal exports are energy and money, said Sung Won Sohn, an economics professor at California State University and a former chief economist at Wells Fargo, in a research note.

Going after either sector would only impact a small elite in Russia that is already enormously wealthy. But the impact would be widely felt in Europe.

For instance, “a large swath of the population in Europe, both Western and Eastern, depend on Russian energy with no good alternatives in the short-run,” Sohn wrote in a research note. If Russia restricted gas exports to Europe, it could further damage the economy there, he said.

A freeze on the movement of money from Russia would hurt the London and Frankfurt financial centers and the European real estate market in general, Sohn said.

In contrast, only a few Russians would be inconvenienced by banking sanctions, he said.

Sanctions on either Russian money or energy would not impact the U.S. economy, he noted. Economic sanctions just are not a good tool to get Russia’s attention, Sohn said.

The Russian economy “is much more comfortable without trade” than any Western nation would be, Sohn said.